Distressed home sales likely to continue into 2013

While real estate agents remain anxious over dwindling inventories and a lack of additional homes to sell, they are equally fearful that banks could yet flood the market with foreclosed properties and tank home prices that have until recently been rising steadily, though slowly, throughout 2012.

Published: Thursday, December 6, 2012 at 1:00 a.m.

Last Modified: Wednesday, December 5, 2012 at 5:25 p.m.

Sales of distressed homes remain brisk throughout Southwest Florida, a trend likely to continue as inventory erodes further, at-risk homeowners opt for short sales and foreclosures slog through area court systems.

While real estate agents remain anxious over dwindling inventories and a lack of additional homes to sell, they are equally fearful that banks could yet flood the market with foreclosed properties and tank home prices that have until recently been rising steadily, though slowly, throughout 2012.

To date, banks have been mostly conservative in releasing foreclosed homes to market in Southwest Florida. But foreclosure-related sales still account for at least one-fifth of all residential deals in the region, about four times higher than in a healthy market, real estate agents say.

In the past month, Realtor Drew Peterson has listed a half-dozen homes that were foreclosed on in 2008 or earlier.

“The banks are trying to get them out as fast as they can, but there is still a lot of stuff making its way through the court system,” said Peterson, a foreclosure specialist at Re/Max Alliance Group.

“It's going to be like that for the foreseeable future,” Peterson said. “Even if all foreclosures stopped now, we would still be dealing with stuff in the system from three, four, five years ago.”

Deanna Atkinson, a Realtor with Coldwell Banker in Bradenton, says the current inventory of 4.5 months of homes to sell would be better balanced at 6 months.

Lender-owned properties are “trickling in” at her office, a pace she hopes will pick up.

“The banks are holding on to them, but they have to do what is best for their assets,” Atkinson said. “We'd like to have a good flow of listings coming on the market. But flooding the market is not a good thing either, since that would change it from a seller's to a buyer's market. We like it to be nice and even.”

Sales of foreclosed properties in Sarasota, Manatee and Charlotte counties jumped 59 percent in the third quarter from three months earlier, and by 22 percent from last year, RealtyTrac Inc. reported Wednesday.

But unlike the recent increase in sales prices seen in all home sales, prices of foreclosed properties were down in Sarasota and Manatee.

Jack McCabe, a Deerfield Beach-based real estate consultant, contends that there are 339,000 open foreclosure cases in Florida courts. He also believes up to 550,000 additional mortgages are in default or have not had payments made on them for at least 90 days.

“We now have two fractured housing markets in Florida,” McCabe said. “One is what Realtors handle on a retail basis through the MLS, and the other is distressed sales through foreclosure auctions or to investor buyers,” McCabe said.

Further whittling down inventory, some large private-equity groups have been snapping up distressed properties in the region, bringing fresh competition to smaller investors who had been buying foreclosed homes for rentals.

Most notably, real estate giant Blackstone Group has spent nearly $10 million for 76 single-family homes in Sarasota and Manatee counties during the past two months. It intends to put many of those into the area's rental pool.

Another buyer, Two Harbors Investment Corp., has paid $4.3 million to buy 48 properties in the two counties since mid-August.

The institutional buyers' presence comes as many lenders have become weary of carrying foreclosed properties and may begin pushing more onto the market in 2013, McCabe said.

“The big question is will they be available to the consumer to take advantage of some of these great deals, or will they only be sold to the hedge funds and deep-pocketed investors and then placed in the rental pool?” he asked.

A total of 1,232 residential properties in some stage of foreclosure or bank-owned were sold in Sarasota, Manatee and Charlotte in the third quarter, RealtyTrac said.

That was up from 773 sales in second-quarter 2012 but down from 1,010 one year earlier.

Prices, meanwhile, have not held up.

The average sale in Sarasota County during the third quarter was valued at $128,699, down by 12.3 percent from the previous quarter and by 4.15 percent from the year before.

Manatee's average sale of $129,956 was up 1.6 percent from three months ago, but down 19 percent from the same time frame in 2011.

Part of the reason for the declining price is more lenders and struggling homeowners moved to complete short sales from July to September, said Daren Blomquist, a RealtyTrac vice president.

But that trend could reverse and foreclosures could increase, he said, if a current exemption from federal taxes on forgiven mortgage debt in short sales expires, as expected, at the end of the year.

“The prospect of being taxed on potentially tens or hundreds of thousands of dollars in additional income may motivate more distressed homeowners to forgo a short sale and allow the home to be foreclosed on,” Blomquist said.

“If the mortgage interest deduction is eliminated due to the fiscal cliff quagmire, it would give many underwater and otherwise distressed homeowners one less reason to hang on to their homes,” he said.

<p>Sales of distressed homes remain brisk throughout Southwest Florida, a trend likely to continue as inventory erodes further, at-risk homeowners opt for short sales and foreclosures slog through area court systems.</p><p>While real estate agents remain anxious over dwindling inventories and a lack of additional homes to sell, they are equally fearful that banks could yet flood the market with foreclosed properties and tank home prices that have until recently been rising steadily, though slowly, throughout 2012.</p><p>To date, banks have been mostly conservative in releasing foreclosed homes to market in Southwest Florida. But foreclosure-related sales still account for at least one-fifth of all residential deals in the region, about four times higher than in a healthy market, real estate agents say.</p><p>In the past month, Realtor Drew Peterson has listed a half-dozen homes that were foreclosed on in 2008 or earlier.</p><p>“The banks are trying to get them out as fast as they can, but there is still a lot of stuff making its way through the court system,” said Peterson, a foreclosure specialist at Re/Max Alliance Group.</p><p>“It's going to be like that for the foreseeable future,” Peterson said. “Even if all foreclosures stopped now, we would still be dealing with stuff in the system from three, four, five years ago.”</p><p>Deanna Atkinson, a Realtor with Coldwell Banker in Bradenton, says the current inventory of 4.5 months of homes to sell would be better balanced at 6 months.</p><p>Lender-owned properties are “trickling in” at her office, a pace she hopes will pick up.</p><p>“The banks are holding on to them, but they have to do what is best for their assets,” Atkinson said. “We'd like to have a good flow of listings coming on the market. But flooding the market is not a good thing either, since that would change it from a seller's to a buyer's market. We like it to be nice and even.”</p><p>Sales of foreclosed properties in Sarasota, Manatee and Charlotte counties jumped 59 percent in the third quarter from three months earlier, and by 22 percent from last year, RealtyTrac Inc. reported Wednesday.</p><p>But unlike the recent increase in sales prices seen in all home sales, prices of foreclosed properties were down in Sarasota and Manatee.</p><p>Jack McCabe, a Deerfield Beach-based real estate consultant, contends that there are 339,000 open foreclosure cases in Florida courts. He also believes up to 550,000 additional mortgages are in default or have not had payments made on them for at least 90 days.</p><p>“We now have two fractured housing markets in Florida,” McCabe said. “One is what Realtors handle on a retail basis through the MLS, and the other is distressed sales through foreclosure auctions or to investor buyers,” McCabe said.</p><p>Further whittling down inventory, some large private-equity groups have been snapping up distressed properties in the region, bringing fresh competition to smaller investors who had been buying foreclosed homes for rentals.</p><p>Most notably, real estate giant Blackstone Group has spent nearly $10 million for 76 single-family homes in Sarasota and Manatee counties during the past two months. It intends to put many of those into the area's rental pool.</p><p>Another buyer, Two Harbors Investment Corp., has paid $4.3 million to buy 48 properties in the two counties since mid-August.</p><p>The institutional buyers' presence comes as many lenders have become weary of carrying foreclosed properties and may begin pushing more onto the market in 2013, McCabe said.</p><p>“The big question is will they be available to the consumer to take advantage of some of these great deals, or will they only be sold to the hedge funds and deep-pocketed investors and then placed in the rental pool?” he asked.</p><p>A total of 1,232 residential properties in some stage of foreclosure or bank-owned were sold in Sarasota, Manatee and Charlotte in the third quarter, RealtyTrac said.</p><p>That was up from 773 sales in second-quarter 2012 but down from 1,010 one year earlier.</p><p>Prices, meanwhile, have not held up.</p><p>The average sale in Sarasota County during the third quarter was valued at $128,699, down by 12.3 percent from the previous quarter and by 4.15 percent from the year before.</p><p>Manatee's average sale of $129,956 was up 1.6 percent from three months ago, but down 19 percent from the same time frame in 2011.</p><p>Part of the reason for the declining price is more lenders and struggling homeowners moved to complete short sales from July to September, said Daren Blomquist, a RealtyTrac vice president.</p><p>But that trend could reverse and foreclosures could increase, he said, if a current exemption from federal taxes on forgiven mortgage debt in short sales expires, as expected, at the end of the year.</p><p>“The prospect of being taxed on potentially tens or hundreds of thousands of dollars in additional income may motivate more distressed homeowners to forgo a short sale and allow the home to be foreclosed on,” Blomquist said.</p><p>“If the mortgage interest deduction is eliminated due to the fiscal cliff quagmire, it would give many underwater and otherwise distressed homeowners one less reason to hang on to their homes,” he said.</p>